Sopheon plc (“Sopheon” or “the Group”) announces that it has reached agreement with counterparties to adjust key aspects of the Group’s debt financing. These adjustments improve the maturity profile of the Group’s convertible loan stock, and introduce $2.7 million of additional working capital from the Group’s existing corporate lenders.
Chairman Barry Mence said:
“As evidence of rising demand for our products and services continues to mount, we wish to ensure that we are well positioned to take advantage of an improving business climate. This will entail a controlled acceleration of recruitment, as well as securing the ability to react rapidly to market opportunities that arise. To support these priorities, we have effected a major improvement to working capital. This has been accomplished without material dilution to shareholders. We look forward to higher growth, and further strengthening of our strategic position.”
Changes to convertible loan stock
On 2 October 2009, the Company announced that it had issued £850,000 of convertible unsecured loan stock (the “Loan Stock”) to a group of investors including key members of the Board and senior management team, maturing on 2 October 2011. The holders of the Loan Stock have unanimously agreed to extend the maturity date of the loan stock by sixteen months to 31 January 2013 and to remove the provision under which, if the Company undertook a placing or other issue of Shares at a lower price per Share than the Conversion Price, the Conversion Price would be adjusted to the placing price (the “Placing Provision”). This amendment was coupled with modification of the conversion price of the loan stock to 7.75p per share, being the current market price, from 10p per share. These changes improve the net current asset position of the group, while also removing a potential source of income statement volatility linked to the accounting treatment of the Placing Provision under the rules of International Accounting Standard 39.
In accordance with the AIM Rules for Companies, Daniel Metzger, having consulted with the Company’s Nominated Adviser, Seymour Pierce Limited, has acted as independent director with respect to this transaction and considers that the amendment to the terms of the convertible loan stock are fair and reasonable insofar as the Company’s shareholders are concerned.
Renegotiation of BlueCrest debt
In June 2007, the group entered into a $3.5 million 48-month mezzanine term loan with BlueCrest Capital Finance (“BlueCrest”), in connection with its acquisition of Alignent Software Inc. This term loan was repayable in equal monthly instalments through to July 2011 and had a carrying value at the end of November 2010 of $611,000.
The Company has come to agreement with BlueCrest to refresh the mezzanine term loan back up to $3.5 million, for a new 39-month term, repayable in equal monthly instalments of $90,000 plus interest through March 2014. The loan bears interest at 13% per annum and incurs a facility fee of 3.75%. After expenses and deducting the carrying value of the original loan, this transaction brings a net cash injection of $2.7 million to the Group. No warrants are being issued to BlueCrest in connection with the transaction.
In addition to the term loan, for a number of years the Group has had access to a revolving line of credit with BlueCrest, secured against the trade receivables of Sopheon’s North American business and with a maximum draw capacity of $1.25 million. This facility was renewable annually on 30 June, but in conjunction with the changes to the term loan, the next renewal date for the facility has been extended to 30 November 2011.
Sopheon plans to issue its next trading update providing initial indications of 2010 performance, on 27 January.